Bitcoin enthusiast and multibillionaire tech investor Chamath Palihapitiya claim that American regulators have effectively killed the cryptocurrency industry.
In an episode of the All-In podcast from April 22, he asserted brashly that “Crypto is dead in America.”
In reaction to the report that crypto exchange Coinbase is now mulling a transfer overseas, Palihapitiya made his statement. He accused Gary Gensler, the head of the United States Securities Exchange Commission: “Crypto is dead in America. I mean now you have Gensler even blaming the banking crisis on crypto — so the United States authorities have firmly pointed their guns at crypto.”
Despite claiming that the United States certainly sees cryptocurrency as a danger to its “establishment,” the tech investor did see several problems with the industry: “In fairness to the regulators, the crypto sector did push the boundaries more than any other sector of the startup economy.”
The good actors are currently “paying the price” for the subpar job done by FTX and other companies that have harmed the reputation of the sector, he concluded as he wrapped up his research.
During his four hours of congressional testimony last week, Gensler received similar criticism from House Republicans on the agency’s crackdown on cryptocurrency platforms.
Rep. Patrick McHenry, R-North Carolina, chair of the House Financial Services Committee, stated that “regulation by enforcement is neither sufficient nor sustainable.” “You’re punishing digital asset firms for allegedly breaking the law when they don’t know it will apply to them,” he added.
One of the show’s co-hosts, David Sacks, said that the US may be trying to suppress cryptocurrency since it threatens the supremacy of the US dollar: “I believe it’s likely not a coincidence that you’re seeing all these concerns about de-dollarization at the same time they’re cracking down on cryptocurrency.”
However, Sacks hinted that the overall effect will be bad since moving cryptocurrency firms overseas will be “terrible for American innovation.”
Some observers have referred to the current situation as “Operation Choke Point 2.0” – a purported coordinated attempt by authorities to dissuade banks from keeping cryptocurrency or offering services to cryptocurrency businesses.
Palihapitiya bemoaned the SEC’s enforcement strategy at the same time, asserting that it unfairly singled out a business with a track record of being regulation-friendly.
“Coinbase played by the rules, stood in line, tried to do the right things. It seems that every step along the way — everything from board composition to executive composition, to how they try to interact with the regulators, yet they were probably the furthest away from getting a license,” he said. “The one that came the closest was the one that was the most fraudulent, which is FTX. How is that even possible?”